Barometer Cost Management: Internal Communication often Insufficient

Companies have professionalised their cost management

Companies in Europe have professionalised their cost management over the previous year. The Barometer Cost Management has risen from 63 to 66 points out of a possible 100 in comparison with the previous year.  Efficiency efforts rely primarily on “hard factors” – in the areas of reporting and use of tools. Companies have deteriorated with regards to “soft factors” such as internal communication on cost-related measures. These are the results shown in the Barometer Cost Management 2013, conducted by the EBS Business School and Expense Reduction Analysts. In the survey, top managers from 215 companies were interviewed.

 
“We see that companies concentrate above all in the areas which have direct effects on their cost management “, Fred Marfleet, Founder and Chairman of Expense Reduction Analysts, comments on the results. This is why the main focus is placed on better use and implementation of methods and tools such as benchmarking, performance indicators, and software tools. In spite of a significant improvement in these areas, only 32% of companies surveyed use external benchmarks and only 39% have a distinct performance measurement system.
 
Recruiting more staff or entrusting more employees with cost management responsibilities were some of the measures to professionalise cost management. Whilst in 2012 36% of companies declared having the necessary workforce, the number rose to 43% in 2013. Marfleet: “Companies acknowledge that cost management can only be effective if the required staff is available.”
 
Whilst companies have significantly improved their “hard factors”, the area of cost culture was neglected. “The cost culture is underestimated in many companies”, says Marfleet. In particular, the internal communication with regards to cost-relevant measures is often insufficient. “However, if the measures implemented are not supported by employees, they can be put at risk of failure”, says Marfleet, and he recommends better communication regarding the reasons for adopting new measures in companies.
 
In the comparison by industry sector, public sector organisations perform the worst. Only 77% of them have carried out cost reduction processes over the previous year. However, this is still an increase by 20 points vs. last year. “This shows that the pressure of costs has reached the sector and that the effects of the debt-crisis are also felt here” says Marfleet.
 
According to the results from the Barometer Cost Management, companies are hit strongest by rising energy costs (49.7%). Other important types of costs are IT, marketing, travel costs and logistics.

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